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I went to Washington DC this week to pick up an award for my work on Advertising and Piracy from the Global Intellectual Property Center, which is a part of the U.S. Chamber of Commerce. The irony will not escape many long time readers of this blog, as I have been critical of the Chamber, especially around the issues of transparency in corporate campaign finance. But I believe strongly that our country is committing financial and cultural suicide when it comes to protecting the rights of artists, so you take your allies where you can get them. I couldn’t resist in my acceptance speech noting the irony.

I want to finish with one thought. As I said this is primarily an issue of transparency and I’m glad the Chamber is for transparency in the advertising business. At the risk of biting the hand that has fed me well today, I would ask that the Chamber also support transparency in corporate donations to politicians.  Once again, thank you very much for your support.

When it was all over a man who works for Homeland Security on IP issues thanked me for my work and then we got into a discussion about his job. It turns out he hasn’t had a permanent boss in four years, because the Senate held up the appointment of Obama’s first nominee and now the vetting process for a second nominee is taking months because of an excess of caution. The story seemed so indicative of the mood in Washington I felt in the two days I was there. Everyone seems resigned to paralysis being the new normal. The Republican minority sees it’s task as just gumming up the works to make sure Obama can’t accomplish anything. And the Democrats sometimes display a kind of Stockholm Syndrome: knowing they are being held hostage, they display cordiality towards their captors.

Meanwhile the news media continues to hunt for disaster stories that will increase the citizens sense of fear and dependency. This little item from the Wall Street Journal, showing a dramatic improvement in the deficit went unnoticed and uncommented on Capitol Hill or other organs of the MSM. It is almost impossible to create an optimistic narrative in Washington, so the best option for me is to return my focus to the Golden State. In California, progressives control both the legislature and the executive branch. Remarkable changes are beginning to happen. The state’s finances are coming into balance after the recent tax rise and money is being spent improving our infrastructure and supporting education. The very idea that Los Angeles could be come a walkable community with a great public transportation system seemed impossible five years ago and yet in a year I will be able to ride the light rail from Santa Monica to USC.

I figure if California can once again assume its role as the architect of America’s future, then many states will follow. If we work on the pillars of the new strategy that Patrick Doherty and Mark Mykleby have been advocating: affordable college, walkable cities, low carbon transportation, regenerative agriculture and resource productivity, we will forge an example for both the nation and the world. Let’s ignore Washington and get on with our own optimistic future.

Waiting in the airport for my plane back to LA, I heard one of the CNN bloviators describe the last four days as a “Reign of Terror”. The mind boggles. I don’t mean to discount Boston’s tragedy and obviously these two crazy kids managed to kill four people and wound quite a few others, but by what measure was the 60 hours after the original bomb blast a “Reign of Terror”? Only by the measure of a fear obsessed 24/7 media culture that has taken the old, “if it bleeds, it leads” adage of the tabloids to its natural conclusion.

Lets step back and think about the quality of “terrorist” that has menaced America post 9/11. As incompetent a collection of losers and Osama wannabes as one could imagine. The shoe bomber, the underwear bomber, the Times Square bomber, and now these two confused Chechens. Here is my assumption about the Boston Bombers. The older brother, having been denied US citizenship because he beat up his girlfriend, becomes alienated and starts hanging out on Islamist web sites. Meanwhile the younger brother, already an American citizen is almost preternaturally assimilated into US youth culture. He’s handsome, smokes pot, has lots of girl friends and dresses like a typical hip hopster. The older brother comes back from a trip to Chechnya talking Jihad and the younger brother is too stoned to resist the manic appeal of his beloved brother to participate in the planting of the bombs, which the older brother has manufactured off of Islamist website recipes.

But they are the gang that couldn’t shoot straight. They are clueless to the fact that any big city in America has almost complete surveillance coverage of its streets. They don’t even think of trying to escape! The little brother goes out and gets stoned with his friends the night after the Marathon. It’s only the next morning when he realizes that he might need his car, which is in the shop getting repaired. By the time both their pictures are on TV, they are in a state of complete panic. You can almost hear the younger brother pleading with his sibling, “what the fuck did you get me into?”

When the inevitable happens and they are cornered by the cops, they comically try to throw one of their IED’s at the cops, only to have it bounce 20 feet in front of them, explode and fill their own legs full of shrapnel.

But if you were to tune into Cable news on Thursday or Friday, you would have not heard about this Opera Bouffe, but rather be confronted with all the post 9/11 Terror in our Cities graphic packages, complete with scary music. A whole city shut down for 24 hours over what should have been treated as a high level SWAT operation. Was there anyone who even dared to ask if this was really the appropriate reaction?

As I have been saying for a while, the default setting for American media and finance culture for at least the last 12 years has been FEAR. It has forced us to overreact in almost every sector. It forced us into two unnecessary wars. It forced us to bail out the big banks at the public expense. It has kept Americas great companies from investing in our future, preferring to hold $trillions in cash on their balance sheets for what they are assured is the coming shitstorm where they will no longer be able to borrow. And few realize that most of the Great Wall Street fortunes made in this period have been by taking advantage of the fear culture. The whole hedge fund economy is based on taking a short position (betting on failure) and then “talking your book” so it becomes a self fulfilling prophecy. How did John Paulson accumulate one of the great fortunes of our time? By designing a securitized bundle of mortgages that HE KNEW WOULD FAIL, taking the short side of the trade and then getting some suckers (fooled by the AAA rating) to take the long side.

Nothing productive has come out of this fear culture. Despite the constant barrage of bad news, the world has actually gotten better in the last 12 years. Millions have been lifted out of poverty. Life expectancies have improved. More women and minorities  are being educated and are taking positions of power. Cars are getting more efficient and less polluting. But for a tabloidized media culture, these are not interesting stories. And for speculative capitalism, good news does not bring instant windfalls like a great short play.

As a society we have to realize that Franklin Roosevelt was right when he said, “We have nothing to fear, but fear itself.” America’s innovation culture was not built by being risk averse, just the opposite. Just how the media and the stock speculators could heed Roosevelt’s advice is of course the much larger question.

As you know, I have been in a rather sour state about digital culture in the past couple of months. I didn’t come to New York City with the express intention of taking the cure for that state, but I got it nonetheless. The first treatment was the opening night of Eric Clapton’s Crossroads Guitar Festival. Five solid hours of (mostly) blues played with both acoustic instruments and vintage electric guitars pumped through tube amps,  that mimicked the glorious Marshall’s and Fenders of the time when I was on the road.

There were moments that made the hair on the back of your neck stand up. Eric Clapton, Andy Fairweather and Vince Gill sitting down on acoustic guitars, trading incredible licks. A shuffle blues with Robert Cray, Jimmy Vaughn, Gary Clarke Jr, BB King and Eric that just was extraordinary. That BB King can still swing at 88 is incredible. And Jimmy Vaughn played a solo that had Eric grinning from ear to ear in admiration. And then there was a whole new generation of players like Doyle Bramhall, Citizen Cope, Gary Clark Jr and a 13 year old named Quinn Sullivan who just blew us away. In the end, the Allman Brothers played the classic shuffle, Statesboro Blues with Taj Mahal and Los Lobos. What a gorgeous cultural stew celebrating this most American of art forms.

What is so important about the Blues is that it is a relatively structured form of 12 bars, but one that allows for the most ecstatic improvisation (think Jimmy Hendrix) possible. What was so therapeutic was that the night confirmed that the art form is alive and well–a deep relief from a frightfully inauthentic cultural period.

This morningI went up to the Gagosian Gallery, where my acquaintance Ed Ruscha has an amazing show of small books, curated by Bob Monk. Ruscha started making small books in  1962 with “Twentysix Gasoline Stations”. He continued to make these small editions of everyday sights like swimming pools, parking lots and even a wonderful “Royal Road Test” in which he and two collaborators fiendishly documented throwing a Royal typewriter out the window of his vintage Oldsmobile on a desert highway.  As clever as Ed’s books are, what is really amazing is the mini industry of copycat projects from conceptual artists all over the world. What Ruscha’s show poses is the same question I had from the night before. Why in an age of digital appropriation would you go back to making art that was proudly analogue? Why would you return to books when the Whitney Museum is filled with Video screens. Why make simple blues music when you could avail yourself of all the samples and beats from Pro-tools? These are important questions and I think they represent some sort of counter movement, what Marcuse would have called a Great Refusal.

Long live Books and The Blues.

Friday’s employment numbers have caused many analysts to set their hair on fire. Initially the Dow fell more than 100 points before saner money returned in the afternoon. This reinforces a theme I have been pursuing on these pages for the last year. For 22 years since George Soros made $1.5 Billion in a week, shorting the British Pound and forcing the Bank of England to devalue the currency on Black Wednesday, September 16, 1992, most of the great fortunes on Wall Street have been made short selling. Since that time, with the rise of the Hedge Fund Industry, built to take advantage of the misery of others–be they firms or whole countries as with Soros and the UK or with Paul Singer’s current pusuit of Argentina. The great fortunes made during the 2008 crash, were those betting the market would crash. Exhibit A would be John Paulson, who actually designed the catastrophically toxic mortgage securities, that he then arranged for Goldman Sach’s and his other banking partners to sell to money managers after they had paid the ratings services Moodys, S & P and Fitch to rate this crap AAA. This is what my finance mentor Richard Rainwater used to call a “self-fulfilling prophecy”. John Paulson bought all the short positions in these toxic bonds that he had designed to blow up and then just waited for the sound of the explosion to collect his billions.

Unfuckingbelievable.

And these guys are not in jail?

Anyway, back to my thesis. The great fortunes of the next fifty years will be made betting on the upside of an emerging global democratic capitalism that actually capable of delivering smart and reasonably priced services to all classes of society. People who bet on the short side are going to be the fools of the future. I agree with Ruy Teixeira, The Whole World is Getting Much, Much Better.

For many on the left, a positive attitude toward economic growth and globalization seems counterintuitive. After all, isn’t there a basic lack of progress in the world today—aren’t things just getting worse rather than better?

No, in fact they’re getting better — much better — and that is despite trends toward increased inequality which have damped down economic advance for average citizens in some countries. Consider the American case, where trends toward inequality have been particularly serious. In 1947, the median family income in the US was around $27,000 in today’s dollars. Today, median family income is around $61,000. Looked at another way, in 1947, 60 percent of families made under $30,000. But today only around 20 percent make less than that figure and 40 percent make over $75,000, a figure that was exceeded by less than 5 percent of families in 1947.

So let’s go back to those unemployment numbers and see why all this fear that the Wall Street Bears are constantly trying to gin up is really just guys “talking their book”. First, traders view the fact that the unemployment rate actually fell in a month when only 88,000 jobs were added, as if everyone had just given up looking for a job. What they hardly ever mention is that 300,000 boomers  Every Month are reaching retirement age, with fairly decent pensions and good Social Security Benefits.No wonder many of them are “leaving the workforce.” That’s what “Social Security” means. And in a few months at least half of those people’s positions will have to be replaced every month. Not everyone reaching 65 can or will retire, but we will witness a big transition in the workforce from the Boomers to the Millenials, and that in itself will change the way business is done.

That was also remarked upon by Teixeira.

By the end of the 20^th century, more technological advances had been made in the previous hundred years than in all of history before 1900.  There is no good reason to believe that this breakneck pace will slow in the 21^stcentury, since we are just on the verge of mastering knowledge gleaned from technological revolutions in three interwined areas: computer science, biomolecular science/engineering, and quantum physics.  Indeed, as we transition from an era where we have discovered the basic laws and building blocks in these fields to an era where we apply that knowledge, the pace of innovation, if anything, may accelerate.

We think we are seeing this same acceleration happen in the USC Annenberg Innovation Lab. All of this is counter to the End of the World Crowd, filled with idiots like David Stockman.

So here is my advice. Stop obsessing with the end of world theme. Stop reading the doom and gloom books, Stop buying gold. Stop trading in and out of stocks every time you get scared (like Friday morning). Invest in companies you think are innovative and have a long term plan and pay dividends. And stick with them. I can assure you, Groupon does not have a real long term plan. Apple does.

In your politics, work with candidates that want to build a world of justice and peace. Not with ones who want to scare you that a vote for the other party will mean the end of the world as we know it.

As I warned a month ago, President Obama overplayed the scare tactics leading up to the Sequester. It now appears that the large polling advantage Obama had over the Republicans on the issue of the economy has vanished in the last month. As I wrote last month the protestations that the economy if the Sequester went through would collapse were hollow.

To say that an $85 billion cut out of a $3.7 Trillion budget is hardly cause for alarm. After the military budget doubled in 8 years under both Bush and Obama, reducing the Pentagon budget by 6% hardly qualifies for endangering our national security. This kind of scare talk should be left to John McCain and Lindsay Graham and will only backfire on the President when it turns out that the sky did not fall after the Sequester went through. Anyone who has run a business–big or small–knows that taking 5% out of a budget can be done without killing the enterprise.

Democrats have to be very careful they don’t get themselves in the position of defending Big Government against a natural reform movement that goes beyond party labels.Andrew Kohut wrote an amazing analysis of the Republican’s Presidential problems on Friday. He made it clear that the right wing media has painted the party into a corner, but he also noted the unique blend of opinion that was expressed in the November election.

Voters generally agreed with the GOP that a smaller government is preferable to a larger, activist one, and therefore they disapproved of Obamacare. However, exit polls showed popular support for legalizing same-sex marriage and giving illegal immigrants opportunities for citizenship.

This combination of conservative and liberal views is typical. To win, both parties must appeal to the mixed values of the electorate. But it will be very hard for the Republican Party, given the power of the staunch conservatives in its ranks.

What is so fascinating is that there is a natural constituency for a real reform movement that crosses party lines. Read more…

I’ve now been in India for a week. Three days at the big Bollywood Conference (Frames 2013) in Mumbai, followed by three days in the holy city of Varanasi on the banks of the Ganges. The two worlds are so far apart that I could have been on different planets. This is my first experience of India, so what follows is a sort of stream of consciousness post.

Mumbai is a big confident city with some of the wealthiest men in India building houses that would have embarrassed the Maharajas for their opulence. I heard that there are more than 100 members of Parliament worth over $1 billion. This may of course be an urban myth,but the perception that the powerful live in a different world seems well founded. Of course this is no different than the U.S., but what does stand out is the understanding that India is a very young democracy. From the point of view of the film makers I met in Mumbai, basic notions of freedom of speech are constantly trumped by the anger felt from certain (often religious) groups who feel offended by the new sensibilities flowing from young secular voices. Every state in India seems to have a different political make up and the politics reminds one of Israel, in which small right wing religious parties have outsized influence. Thus a film may be censored in one state and a hit in another. As a young former student of mine remarked, it’s quite easy for a populist firebrand to get a thousand people riled up about some rather trivial outrage.

By contrast, the life on the banks of the Ganges in Varanasi seems not to have changed much from the first millennium. Every night the fires of the funeral pires burn until daybreak. The smell of sandalwood drifts out over the water and there are no tears from the relatives who come to say goodbye. My amazing guide Aman Choudhary says that is because life and Moksha live side by side in this pace he calls Kashi. Moksha could perhaps be compared to the Buddhist notion of Nirvana. If your life in this world ends in ashes on the banks of the Ganges, you don’t have to return. I guess what got to me most was the joy in the faces of the pilgrims as they plunged themselves in the Ganges for the first time in their life. Some of them had journeyed for three days by train and had little more than the clothes on their backs. But their faith was still strong.

I don’t know how India is going to resolve the worlds of Mumbai and Kashi. Perhaps they never will. But close to the banks of the river was a Mosque and the Muslims and the Hindus seemed to coexist with ease. I know there are many battles elsewhere in the country, but in this religous city, there is peace. Farther outside of town was the Stupa commemorating the place where Buddha preached his first sermon. Thirty monks from Thailand stood before a magnificent 5th Century Buddha and chanted. I fixed my eyes on the gentle smile of the Buddha, and was pulled by the chants back in time. The worlds of reality TV, Internet Privacy and dystopian fears faded away.

I once taught a graduate seminar on Science Fiction films and their social meaning. From Metropolis  to Minority Report , their view of the future and the role of technology in our lives was universally grim. There is a scene in Ridley’s Scott’s brilliant  Blade Runner , in which the lead genetically engineered robot Roy Batty wants to determine if he is human. He puts his hand down on a nail, which pierces his flesh, but he feels nothing. I’ve thought a lot about that scene recently because the notion of what it means to be human is increasingly challenged by the blind obsession that technology inevitably leads to a better life.

The Greek philosopher Epicurus believed that the honest and good life was made up of three elements.

• The company of good friends
• The freedom and autonomy to enjoy meaningful work
• The willingness to live an examined life with a core faith or philosophy

I think all three of these elements are being challenged by the techno-utopians. Would Epicurus think my 2600 “friends” on Facebook qualify for his first maxim? Of course not. Do the majority ( or even a significant minority) of the world’s citizens have “the freedom and autonomy to enjoy meaningful work”? Of course not. Do most people live “an examined life with a core faith or philosophy”? Of course not. Read more…

Watch and discuss

For the past couple of months I’ve been engaged in reporting on the nexus between major brands and pirate bit-torrent sites. It has been like lifting up a rock to see all the weird life forms crawling out of the light. The New York Times characterized the efforts to pin down who was responsible to Whack A Mole. But what really interested me is that the whole future of the advertising business seems to be based on the premise of what I call a Geo-Behavioral Targeting System. The implicit assumption is that consumers don’t care if Google, Facebook or an Ad Network has a total window into the most intimate details of your personal life, your finances, your aspirations and dreams. All the better to sell you your own future. In the futuristic novel,Super Sad True Love Story: A Novel, Gary Shteyngart posits a world in which your credit score, sexual preferences and other details are available to anyone who points their smartphone at you.

I was reminded of all this reading an piece by Evgeny Morosov in yesterday’s New York Times. Morosov has been a lonely voice in the wilderness, protesting against the rise of Techno-utopianism. In The Perils of Perfection, he worries about what the rise of the ubiquitous App Culture is doing to us.

LAST month Randi Zuckerberg, Facebook’s former marketing director, enthused about a trendy app to “crowdsource absolutely every decision in your life.” Called Seesaw, the app lets you run instant polls of your friends and ask for advice on anything: what wedding dress to buy, what latte drink to order and soon, perhaps, what political candidate to support.

Seesaw offers an interesting twist on how we think about feedback and failure. It used to be that we bought things to impress our friends, fully aware that they might not like our purchases. Now this logic is inverted: if something impresses our friends, we buy it. The risks of rejection have been minimized; we know well in advance how many Facebook “likes” our every decision would accumulate.

Jean-Paul Sartre, the existentialist philosopher who celebrated the anguish of decision as a hallmark of responsibility, has no place in Silicon Valley. Whatever their contribution to our maturity as human beings, decisions also bring out pain and, faced with a choice between maturity and pain-minimization, Silicon Valley has chosen the latter — perhaps as a result of yet another instant poll.

Maybe people don’t want the responsibility of making choices anymore. Maybe our whole lives should be crowdsourced. After all if my friends told me to do something, its not my fault if it turned out to be a stupid move.

Readers of this blog know that I believe that President Obama has been very effective in setting the course of the nation since his reelection. But I must point out that the news conference yesterday on the Sequester was pretty tone deaf. 

President Obama on Tuesday painted a dire picture of federal government operations across the United States should automatic budget cuts hit on March 1: F.B.I. agents furloughed, criminals released, flights delayed, teachers and police officers laid off and parents frantic to find a place for children locked out of day care centers.

To say that an $85 billion cut out of a $3.7 Trillion budget is hardly cause for alarm. After the military budget doubled in 8 years under both Bush and Obama, reducing the Pentagon budget by 6% hardly qualifies for endangering our national security. This kind of scare talk should be left to John McCain and Lindsay Graham and will only backfire on the President when it turns out that the sky did not fall after the Sequester went through. Anyone who has run a business–big or small–knows that taking 5% out of a budget can be done without killing the enterprise. The Pentagon is the most bloated enterprise in America. These cuts can only help the lazy planners realize that we live in a new Post Empire World. The quicker the President realizes that fear mongering won’t work, the sooner we can get back to the real work of American Renewal.

For me, the place to start that strategic renewal is Patrick Doherty’s amazing essay in Foreign Policy, A New U.S. Grand Strategy.

The status quo is untenable. In the United States, the country’s economic engine is misaligned to the threats and opportunities of the 21st century. Designed explicitly to exploit postwar demand for suburban housing, consumer goods, and reconstruction materials for Europe and Japan, the conditions that allowed it to succeed expired by the early 1970s. Its shelf life has since been extended by accommodative monetary policy and the accumulation of household, corporate, and federal debt. But with Federal Reserve interest rates effectively zero, Americans’ debt exceeding their income, and storms lashing U.S. cities, the country is at the end of the road.

Abroad, Washington’s post-Cold War pattern of episodic adventurism and incremental crisis management only creates further uncertainty, and rising powers will not lead. Other major economies have little appetite for altering the global order and hence are doubling down on the old system, exacerbating trade imbalances and driving record resource extraction. As commodity prices rise, global powers are hedging ever more aggressively — stockpiling resources and increasingly becoming entangled in conflicts in resource-rich areas. As the global economy falters, unrest rises and the great unresolved conflicts of the 20th century — the Middle East, South Asia, North Korea, Taiwan — grow increasingly enmeshed in the power dynamics of this new era.

Simply put, the current U.S. and international order is unsustainable, and myriad disruptions signal that it is now in a process of collapse. Until the United States implements a new grand strategy, the country will face even more rapid degradation of domestic and global conditions.

Read the whole essay and then let’s discuss. May we live in exciting times.